Auto market hitting the gas: results of first half of the year

Three-fold sales growth

In the first half of 2023, 401,6 thousand new passenger cars were sold in Russia — by 14% more than in the same period last year. In June, according to the analytical agency Autostat, 82,4 thousand cars were sold (2,5 times more than in June 2022) — this is the largest monthly result since March last year.

Tatarstan is no exception: in June, 3,2 thousand new cars were sold in the republic — almost three times more than in the same period last year. In May — 2,8 thousand new cars. In the Volga Federal District, 16,709 cars were sold in June — 2,9 times more than a year earlier. In May — 14,3 thousand new cars.

Sales of new passenger cars in Tatarstan and the Volga Federal District

Data of Autostat Info

Lada (1,3 thousand cars), Chinese Chery (315) and Haval (273) are the leaders in Tatarstan. So far, “Korean” Hyundai (224) and Kia (206) maintain strong positions. But in the near future, they may be pushed by Geely, Exeed, Omoda and Changan. Besides, 80 Moskvitchs were sold in Tatarstan in June.

Top 10 car brands in Tatarstan in June

Data of Autostat Info

A similar picture is in the Volga Federal District — Lada (7,710 new cars), Chery (1,684), and Haval (1,430) are in the top. The 4th place — Geely (794). Omoda (592), Changan (590) and Exeed (405) are actively growing. Also in June, 269 Moskvitch cars were sold in the Volga Federal District.

Top 10 car brands in the Volga Federal District in June

Data of Autostat Info

Dependence on technology from China

The prospects of other Russian manufacturers — Sollers and Moskvitch — are connected with the Chinese partner JAC, since these models, in fact, are repainted JAC cars, notes Azat Timerkhanov, the head of the press service of the analytical agency Autostat: “Today, when there has been a transformation in the market, this may be enough, but in order to develop further, perhaps, they need their own platform. But these are huge investments," he comments. “The same applies to AvtoVAZ — there are their own platforms, but they need to be updated.”

“The Russian automotive industry is currently an import-dependent industry," agrees Anna Buylakova. “Breaking the usual commercial relations is a serious blow for the industry, but it can give it an impetus to become more independent. The process of localisation of production is not fast. The industry will continue to depend on imported components in the near future, but there is potential for the development of competencies within the country on a longer horizon.”

Azat Timerkhanov believes that the Russian auto industry is again “stepping on the same rake again," only if Russia used to look to the West, now it is looking to the East.

Russians are not ready to completely switch to Chinese cars

“In the current conditions, the Chinese are developing more than successfully. According to the results of the first half of 2023, the total number of Chinese dealerships in Russia has approached 1,5 thousand and amounted to 46% of the entire official dealer network of the country," Alexander Potapov estimated at Otkritie Auto. “According to the abundance of new Chinese models sold in any foreign market, Russia took the confident lead last spring. Their total number exceeded a hundred, and if the same dynamics is maintained, the debuts of new China brands may at least double by the end of the year.”

The share of Chinese cars in the sales of new cars is already approaching 50%, the expert notes. The only limiting factor for the even more active development of Chinese brands on the market is the price.

“Within 2 million rubles, the choice for new Chinese cars is no longer so wide, since the cost of many of them has already exceeded this mark," says Azat Timerkhanov. In fact, within 2 million rubles from Chinese models, one can choose only among new products that have appeared on the market recently, for example, Kaiyi and BAIC. “However, it is difficult to say what awaits you in the process of their further operation. Therefore, it is better to add another 500-700 thousand to these 2 million, and the choice among Chinese cars will significantly expand," he recommends.

Igor Shagapov, the presenter of Auto Selector's Advice channel, is sure that people who have 1-3 million rubles in their budget will continue to choose time-tested cars — used European or Japanese cars with two or three owners and a small mileage. “The domestic consumer is not yet ready to fully switch to the Chinese car industry," the expert is convinced.

According to Autostat agency, in just 5 months of 2023, Russians bought almost 2,3 million used passenger cars — by 24% more than in the same period last year. About a quarter of this amount was accounted for by domestic cars — 526,5 thousand units. Their volume of purchases increased by only 7% during the reporting period. Accordingly, the remaining 76,6% are foreign used cars (1,72 million), the volume of purchases of which increased by 30%.

“In the used car market, as well as in the novelty market, there is now a shortage of choice and an increase in prices. The focus of buyers has shifted towards more age-related options: if earlier a motorist chose from 3-5-year-old cars with mileage up to 100 thousand, now it is 5-7-year-old cars with mileage up to 200 thousand," says Igor Shagapov. “Many have become more loyal to minor problems in the history of the car: minor accidents, several owners, the absence of a 'fat' configuration.

Prices accelerate the dollar exchange rate and the deficit

Parallel imports could not compensate for the volume of deliveries of the withdrawn Western brands, so it is natural that their stocks have practically dried up. Against this background, there has been a sharp rise in the price of American and European cars over the past six months (on average +115% and +38%, respectively), Azat Timerkhanov notes. And Chinese cars, who today act as an alternative to the withdrawn foreign cars, have added only 4% in price during this time.

“The weighted average price of a new passenger car in Russia today is 2,65 million rubles — by 11% more than a year ago. For used cars, this figure is less — 0,98 million rubles, but it also increased by 11%," Azat Timerkhanov notes.

Anna Buylakova expects continued growth in car prices this year, in particular due to the devaluation of the ruble.

“Cars in Russia today are much more expensive than in other countries, due to the shortage of supply and the high cost of delivery," says Alexander Potapov, an expert at Otkritie Avto. “Against the background of the current growth in exchange rates, prices will continue to increase monthly in both the primary and secondary markets.”

At the same time, in his opinion, the future of parallel imports is doubtful while maintaining the current dollar exchange rate. “There is already a significant reduction in new orders for parallel imports, and in 2-3 months we will see a significant decrease in warehouse balances, which will mainly affect the market in early 2024," he believes.

With a foreign exchange rate of up to 70-75 rubles per dollar, this channel was profitable for dealers and provided the best price for the final buyer. “After the growth of the exchange rate above 80 rubles, the profitability of this business immediately sank," the expert comments.

In general, in the first five months of 2023, Toyota (7,684), Hyundai (3,053), BMW (3,007), Mercedes-Benz (2,867) and Mitsubishi (2,673) made up the top five brands in parallel imports. The overwhelming volume of registrations in parallel imports falls on SUV-segment cars — about 65%. Three out of four imported cars are owned by private individuals.

The year promises to be fruitful

According to the forecasts of Autostat agency, 800-900 thousand new passenger cars will be sold in Russia in 2023. Compared to 2022, the car market will grow by about 30-45%. This is due both to the effect of a low base, and to the expansion of Chinese brands, which are becoming more and more in the Russian market.

“The second half of the year has always been more productive for our auto retail than the first, even during periods of relatively quiet business. This year we expect a similar picture," Alexander Potapov forecasts . “This will be facilitated by the growth of AvtoVAZ sales and the further expansion of the Chinese business. The sales of 900 thousand new cars at the end of the year look like the most realistic scenario.